PUBLIC INTEREST RESEARCH GROUP OF NEW JERSEY, INC. AIKIA NJPIRG STUDENT CHAPTERS FINANCIAL STATEMENTS. July 31, 2014

Transcription

1 PUBLIC INTEREST RESEARCH GROUP OF NEW JERSEY, INC. AIKIA NJPIRG STUDENT FINANCIAL STATEMENTS July 31, 2014

2 PUBLIC INTEREST RESEARCH GROUP OF NEW JERSEY, INC. AIKIA NJPIRG STUDENT TABLE OF CONTENTS July 31, 2014 Page Number Independent Auditors' Report...1 Financial Statements Statement of Financial Position...3 Statementof Activities... 4 Statement of Functional Expenses...5 Statementof Cash Flows...7 Notes to Financial Statements...8

3 r IMERCAdIEN, P.C. CERTIFIEd PubLic ACCOUNTANTS ll la] I,] lw Ii a] III] To the Board of Directors of Public Interest Research Group of New Jersey, Inc. a/k/a NJPIRG Student Chapters Report on the Financial Statements We have audited the accompanying financial statements of Public Interest Research Group of New Jersey, Inc. a/k/a NJPIRG Student Chapters ("Student Chapters") which comprise the statement of financial position as of July 31, 2014 and 2013, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. o AN NBEPENDENTLY OWNED MEMBER, MCGLADREY AWANCE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACcOUNTANTS NEW JERSEY 50d m OF CERTIFIED PUBLIC ACCOUNTANTS NEW YORK SOCIB.l'f OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCUDNTONTS AICPAs PRIVATE COMPANIES PRACT10E SECTION AICPAS CENTER FOR AUDIT QUALITY REGISTERED WITH THE PCAOB An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion. CELEBRATING 50 YEARS OF LEADING BY EXAMPLE P.O. Box 7648 * Princeton, NJ ' Fax The McGtadrey AIl,ance Is a premier attibation of lndcpendent accounting and consulting firms. The McGtadrey Alliance member finns maintain their name, autonomy and independence and are responsible For their own client the arrangements. dcliveoi of services and maintenance of client relationships.

4 I]] In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Student Chapters as of July 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. I May 29,

5 STATEMENT OF FINANCIAL POSITION July 31, 2014 and 2013 ASSETS Current assets Cash Investments Accounts receivable Loan receivable, current portion Due from affiliates Prepaid expenses Total current assets Loan receivable, net of current portion Equipment and leasehold improvements Total Assets $ 181,811 $ 210,761 1,392,080 1,358,360 54,896 62,824 9,000 6,000 1, ,683 6,503 1,646,961 1,644,533-3,000 4, $ 1,651,915 $ 1,653,872 LIABILITIES AND NET ASSETS Current liabilities Accounts payable and accrued expenses Due to affiliate Total Liabilities Net Assets Total Liabilities and Net Assets $ 192,959 $ 170, ,363 42, , ,346 1,243,593 1,440,526 $ 1.651,915 $ 1,653,872 See notes to financial statements. 3

6 STATEMENT OF ACTIVITIES Years Ended July 31, 2014 and 2013 Support and revenues Student fees, Rutgers University Program service revenue Investment return Other income Total support and revenues Expenses Program services Management and general Fundraising Total expenses Change in net assets Net assets, beginning of year Net assets, end of year $ 537,397 $ 538,387-8,000 12,692 6, , , , ,267 48,512 36, , , ,077 (196,933) 124,882 1,440,526 1,315,644 $ 1,243,593 $ 1,440,526 See notes to financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES Year Ended July 31, 2014 Salaries Payroll taxes and employee benefits Citizen outreach expense Dues Professional services Program development Rent Grants Travel Printing and reproduction Bad debt expense Telephone Supplies Utilities Insurance Depreciation and amortization Office supplies and miscellaneous Equipment maintenance Recruitment Total 2014 Management Program and Services General Fundraisinci Total $ 4,610 $ 13,438 2,772 3,594 $ 116,327 31, , ,492 73,515 8,481 17,255 13,420 7,567 5,788 5,299 2,986 1,787 1,371 1, $ 676,398 11,500-25, , , $ 48, $ 22,132 $ 134,375 37, , ,492 85,015 33,922 19,933 13,420 8,741 6,685 6,121 3,450 2,326 1,583 1,552 1,385 1, $ 747,042 See notes to financial statements. 5

8 PUBLIC INTEREST RESEARCH GROUP OF NEW JERSEY, INC. AIKJA NJPIRG STUDENT STATEMENT OF FUNCTIONAL EXPENSES Year Ended July 31, 2013 Salaries Payroll taxes and employee benefits Dues Citizen outreach expense Program development Rent Professional services Recruitment Travel Telephone Office supplies and miscellaneous Utilities Depreciation and amortization Equipment maintenance Printing and reproduction Insurance Postage Total 2013 Management Program and Services General Fundraisinci $ 103,695 $ 1,928 $ 16,045 23,396 1,883 3, ,727 42,996 6,241 18,722 19, ,460 4,290 3,963 1,975 1,399 1,180 1,156 1, $ 365,267 11, , $ 36, $ 25,996 Total $ 121,668 28, ,727 42,996 24,963 22,621 11,300 7,579 5,034 4,650 3,908 1,642 1,385 1,356 1, $ 428,077 See notes to financial statements. 6

9 STATEMENT OF CASH FLOWS Years Ended July 31, 2014 and 2013 Cash Flows from Operating Activities Change in net assets $ (196,933) $ Adjustments to reconcile change in net assets to net cash from operating activities: Bad debt expense Depreciation and amortization Realized gains on sale of investments Unrealized (gains) losses on investments 6,121 I,385 1,385 (1,152) (1,475) (2,568) 2,192 Increase (decrease) in cash from Accounts receivable Prepaid expenses Accounts payable and accrued expenses Net cash from operating activities 1,807 (1,124) (1,180) (5,278) 22,609 88,786 (169,911) 209,368 Cash Flows from Investing Activities Purchases of investments Proceeds from sales of investments Net cash from investing activities (715,000) (851,000) 685, ,000 (30.000) (170,000) Cash Flows from Financing Activities Advances from (repayments to) affiliates, net 170,961 (98,191) Net change in cash Cash beginning of year Cash end of year (28,950) (58,823) 210, ,584 $ 181,811 $ 210,761 See notes to financial statements. 7

10 NOTES TO FINANCIAL STATEMENTS A. NATURE OF ORGANIZATION Public Interest Research Group of New Jersey, Inc. a/k/a NJPIRG Student Chapters ("Student Chapters") located in New Brunswick, New Jersey, is a non-profit, student directed organization that recruits and trains students to conduct public interest research, educates the campus and local community about civic engagement, and advocates for real solutions. From direct service to the community to advocating for common sense policy solutions, Student Chapters melds the technical knowhow of University research and classroom education with real world advocacy and hands on experience. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of Student Chapters have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Net assets and revenues and gains and losses are classified based on the existence or absence of donor-imposed restrictions. Student Chapters is required to report information regarding its financial position and activities according to three classes of net assets: o Unrestricted net assets - net assets not subject to donor-imposed stipulations, and therefore expendable for operating purposes. Temporarily restricted net assets - net assets subject to donor-imposed stipulations that will be met by actions of Student Chapters and/or by the passage of time. Permanently restricted net assets - net assets subject to donor-imposed stipulations that they be maintained permanently by Student Chapters. Generally, the donors of these assets permit Student Chapters to use all or part of the income earned on related investments for general or donor-specified purposes. Student Chapters has no temporarily or permanently restricted net assets. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash Cash include highly liquid debt instruments with original maturities of ninety days or less. Investments Investments consist of certificates of deposit with original maturities in excess of ninety days and are stated at fair value in the statement of financial position. All interest and realized and unrealized gains and losses are reported in the statement of activities as increases or decreases in unrestricted net assets.

11 NOTES TO FINANCIAL STATEMENTS B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fair Value Measurements Valuation techniques used to measure fair value are prioritized into the following hierarchy: Level 1 - Determined using quoted market prices in active markets for identical assets and liabilities. Level 2 - Determined using quoted market prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market for substantially the full term of the assets or liabilities. Level 3 - Determined using inputs that are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The market for assets and liabilities using level 3 measures is typically inactive. Receivables Student Chapters considers all accounts receivable, loan receivable and amounts due from affiliates to be fully collectible; accordingly, no allowance for doubtful amounts is required. If amounts become uncollectible, they will be charged to the change in net assets when that determination is made. Equipment and Leasehold Improvements Equipment and leasehold improvements in excess of $500 are capitalized as assets and recorded at cost, except for donated items, which are recorded at the fair value on the date of donation. Depreciation is computed by the straight-line method over the estimated useful lives of the assets, which are five to seven years for equipment and furniture. Leasehold improvements are amortized over the lesser of the length of the related leases or the estimated useful lives of the assets. Repairs and maintenance which do not extend the useful lives of the related assets are expensed as incurred. Public Support and Revenue Recognition Contributions are recognized when the student makes a promise to give to Student Chapters that is, in substance, unconditional. All student contributions are unrestricted. Program service revenue is recognized when the service is provided. Income Taxes Student Chapters is exempt from federal income taxes under Section 501(c)(4) of the Internal Revenue Code and applicable state law. Income generated by activities that would be considered unrelated to Student Chapters' mission would be subject to tax, which, if incurred, would be recognized as a current expense. No such tax has been recognized for the years ended July 31, 2014 and 2013.

12 NOTES TO FINANCIAL STATEMENTS B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes (Continued) Student Chapters accounts for uncertainty in income taxes recognized in the financial statements using a recognition threshold of more likely than not as to whether the uncertainty will be sustained upon examination by the appropriate taxing authority. Measurement of the tax uncertainty occurs if the recognition threshold has been met. Management determined there were no tax uncertainties that met the recognition threshold. Student Chapters' federal exempt organization returns are no longer subject to examination by the Internal Revenue Service for years prior to Functional Allocation of Expenses Certain operating expenses have been allocated to program services based on the reasonable benefit that the program derived from these expenses. Some of the expenses charged to the programs represent direct expenses related to program operations and objectives. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU , Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to students and customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard will be effective for Student Chapters for the fiscal year ending July 31, Student Chapters has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the financial statements. In August 2014, the FASB issued ASU , Presentation of Financial Statements - Going Concern (Subtopic ): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. ASU requires that an entity's management evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Certain disclosures are necessary in the footnotes to the financial statements in the event that conditions or events raise substantial doubt about an entity's ability to continue as a going concern. The updated standard will be effective for Student Chapters for the fiscal year ending July 31, Student Chapters has not yet assessed the impact ASU will have upon adoption. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. The reclassifications have no effect on the change in net assets. Subsequent Events Management has evaluated events for potential recognition and disclosure that occurred after July 31, 2014, but before May 29, 2015, the date that the financial statements were available to be issued. No items were determined by management to require disclosure.

13 NOTES TO FINANCIAL STATEMENTS C. LOAN RECEIVABLE Student Chapters has a loan receivable in the original amount of $15,000 due from Maryland Public Interest Research Group Inc., payable in five annual installments of $3,000 from 2011 through The loan bears no interest and there is no collateral associated with this loan. Total amount outstanding on the loan at July 31, 2014 and 2013, was $9,000. D. INVESTMENTS Investments at July 31, 2014 and 2013, are as follows: Certificates of deposit Certificates of deposit Fair Unrealized Cost Value Depreciation $ 1.395,000 $ 1,392,080 $ (2920) 2013 Fair Unrealized Cost Value Depreciation $ 1.365,000 $ 1,358,360 $ (6,640) The following schedule summarizes the investment return in the statement of activities: Interest income Realized gains on sale of investments Unrealized gains (losses) on investments Total investment return E. FAIR VALUE MEASUREMENT Year Ended July 31, $ 8,972 $ 7,289 1,152 1,475 2,568 (2,192) $ 12,692 $ 6,572 Fair values of assets measured on a recurring basis at July 31, 2014 and 2013, were as follows: July Fair Value Level I Level 2 Level 3 Total Investments Certificates of deposit - $ 1,392,080 $ - $ 1,392,080 July Fair Value Level I Level 2 Level 3 Total Investments Certificates of deposit - $ 1,358,360 $ - $ 1,358,360 There have been no changes in valuation techniques and related inputs. Fair value of fixedmaturity certificates of deposit was estimated using the rates offered at July 31, 2014 and

14 NOTES TO FINANCIAL STATEMENTS F. EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements consist of the following: Office equipment and furniture Leasehold improvements Subtotal Less accumulated depreciation and amortization Total July 31, $ 32,580 $ 32,580 1,256 1,256 33,836 33,836 28,882 27,497 4,954 $ 6,339 Depreciation and amortization expense for both years ended July 31, 2014 and 2013, was $1,385. G. JOINT COSTS During the years ended July 31, 2014 and 2013, Student Chapters incurred joint costs of $215,363 and $42,996, respectively, for programmatic activities and materials, of which 100% was allocated to program expense. H. OPERATING LEASE COMMITMENT Student Chapters had a non-cancelable operating lease for a rental obligation that expired in August 2013 and continued on a month-to-month basis. Under an agreement with the Fund for the Public Interest, Inc. ("FFPI"), co-tenant of the property, they paid 50% of the total rental cost. Student Chapters paid the remaining 50%. Net rental expense for this lease was $14,394 and $13,448 for the years ended July 31, 2014 and 2013, respectively. On May 9, 2014 Student Chapters entered into a non-cancelable operating lease covering the period from September 1, 2014 through August 31, In addition Student Chapters is also required to cover a portion of the occupancy costs. Future minimum lease payments under the above operating lease are as follows: Year Ending July 31, Thereafter Total $ 11,250 12,775 13,080 16,068 16,434 53,000 $ 122,607 ip

15 NOTES TO FINANCIAL STATEMENTS I. AFFILIATED ORGANIZATIONS AND RELATED PARTY TRANSACTIONS Student Chapters receives technical programmatic assistance from FFPI. Such amounts are included in accounts payable and accrued expenses as follows: July 31, $ 36,121 $ 23,928 Student Chapters pays for certain rental, office and health expenses on behalf of FFPI. Such amounts are included in accounts receivable as follows: Student Chapters had amounts due to/from related entities as follows: July 31, 3,088 $ 6,501 Due to affiliate: Citizen Lobby, Inc. July 31, $ 215,363 $ 42,996 Due from affiliates: Citizen Lobby, Inc. Public Interest Research Foundation of NJ Total $ ,491 $ 85 In April 2013, Student Chapters entered into a joint door-to-door canvassing campaign with Citizen Lobby, Inc. whereby Student Chapters will reimburse Citizen Lobby, Inc. up to 60% of any costs incurred in furtherance of the program. Such amount is included in citizen outreach expense as follows: Year Ended July 31, Citizen Lobby, Inc. $ 215,363 $ 42,996 Student Chapters is a co-tenant of a property leased by a related entity. Student Chapters' portion of the leased property and the amount included in rent is as follows: Year Ended July 31, Citizen Lobby, Inc $ 5,553 13

16 NOTES TO FINANCIAL STATEMENTS J. RETIREMENT PLAN Student Chapters provides, through a multi-employer plan with FFPI, an employee savings plan whereby eligible and participating employees may elect to contribute, by salary reduction, up to seventy-five (75%) of their eligible compensation up to the maximum allowed under the Internal Revenue Code. Student Chapters contributes 100% up to 3% and an additional 50% over the 3% up to 5% of participants' salaries as matching contributions. Student Chapters' contributions were $1,287 and $1,432 for the years ended July 31, 2014 and 2013, respectively. K. CONCENTRATION OF CREDIT RISK AND FUNDING SOURCES Student Chapters maintains cash balances and certificates of deposit which may, at times, exceed federally insured limits. Student Chapters historically has not experienced any credit related losses. Management believes that it is not subject to any significant credit risk on its cash accounts and certificates of deposit. Student Chapters received approximately 98% and 97% of its support and revenues from Rutgers University, which is located in New Jersey, for the years ended July 31, 2014 and 2013, respectively. A significant reduction in the level of this revenue, if it were to occur, could have a significant negative effect on Student Chapters' activities.